From online tire sales to fleet services to free trade, Modern Tire Dealer Senior Editor Joy Kopcha covered a lot of ground with Pete Selleck, chairman and president of Michelin North America Inc.
Their conversation took place at at Movin’On, a global sustainability conference, in June 2017. The interview begins with Selleck's perspective on the online tire selling channel.
Online tire sales
This is a topic where consumers and tire dealers don’t see eye-to-eye, Selleck said. Dealers have been vocal in their opposition since Michelin started selling BFGoodrich-brand tires online in September 2016, but Selleck said Michelin isn’t making a strategic move to take business away from them.
“We’re responding to consumers who say ‘I don’t understand why I can’t go to your website and do the transaction.’
“We don’t think online sales are going to take over,” Selleck said. “In today’s world, you can no longer tell the consumer how they’re going to do it. Consumers keep saying we want to buy the tire wherever we want to buy it, whether it’s online, on Amazon, on a dealer’s website, or by telephone. We want to have all those options.
“The advantage for dealers is that very few people have mounting and balance machines in their garage, so consumers are still going to use dealers for the service aspect.”
He thinks dealers “are realizing it’s not representing a significant amount of our sales.
“We’ve waited a long time. We’ve involved the dealers in the process. We’re not overly promoting that channel. We don’t have a strategy to have a margin shift going on between dealers and manufacturers. Our strategy is first and foremost letting the consumer buy the tire they want, and then making sure the dealer is an integral part of that process.
“Most consumers still prefer to research online, go to the dealer, have a discussion with the dealer and make the decision.”
The same day of the MTD interview, Michelin announced its acquisition of NexTraq, a commercial fleet telematics company. NexTraq’s technology focuses on driver safety — it monitors reckless driving and stops texting while driving — and also studies fuel management and fleet productivity. It specializes in fleets of small commercial vehicles (classes 3-5), ranging from two to 50 vehicles.
NexTraq has 117 employees, approximately 7,000 fleet customers and 116,000 individual subscribers. It will operate as an independent business unit.
Selleck said the addition of NexTraq relates to one of Michelin’s core strategies: “We have to become even more customer centric.
“From a consumer standpoint we’re pretty good, but from business-to-business, with dealers and other businesses, we’re not as good as we need to be,” Selleck said. “We’ve got to better understand the challenges that dealers and fleet owners and mining companies and aircraft companies have. What are their larger problems?”
NexTraq was particularly attractive because it focuses on small fleets. “We already deal with them on the tire side, but this gives us another way to help them move forward.”
Asked if this acquisition makes small fleets a new focus for Michelin, Selleck said, “We are not as strong with small fleets as we are with large fleets, so we recognize this gives us an opportunity.”
Michelin is one of three manufacturers building a tire plant in Mexico, and Selleck reiterated the company is “still building the plant.” He said he expects the North American Free Trade Agreement to be re-negotiated, but “I don’t think it will be changed in a major way.”
Michelin currently has little production capacity in Mexico, but operates three plants in Nova Scotia, Canada. He pointed to the company’s Fort Wayne, Ind., plant, which exports a quarter of the tires it produces. Michelin’s earthmover tire plants export 80% of what rolls off the production line.
“I think society needs companies in the public square. We are talking more openly about free trade. We didn’t think we had to. We thought people understood.”
For Kopcha’s coverage of the Movin’On conference, see “Sustainability Is Driving Michelin's Growth Now, and for the Future.”